captioning sponsored by wpbt >> this is n.b.r. >> mike: from paint to pet food, hats to barbecue. as a nation, we make millions of products every year. but have you ever wondered just how those things are made and what drives those companies? tonight in this "n.b.r." special edition "made in america" we go to towns small and large to meet unique businesses building jobs and profits. that and more tonight on "n.b.r." good evening, i'm mike hegedus with an n.b.r. special edition, made in america. walking down kentucky street in downtown petaluma, california, but it could be anywhere, u.s.a. this is where small businesses live. small businesses that create two out of every three new jobs in

the u.s. tonight you're going to meet some of the people behind those businesses and find out how they plan to keep building those businesses. we begin with the housing market, ground zero for the recession. from construction to appliance makers, when it collapsed it took a lot of very good companies down with it. but here's one that has managed to learn how to paint over the rough spots. you can brush it on, you can roll it on, you can get it on your pants. paint. the kelly moore plant in san carlos, california, turns out nearly 40,000 gallons a day. it's one of the largest employee-owned paint operations in the u.s. part of a $13 billion industry domestically. 140 workers in the 15 acre san carlos facility, 1,500 world wide, including 150 retail outlets in seven states. >> we own currently 58% of the stock and the rest of the stock is owned by the moore family. >> mike: you like white? they got it. you like -- they got that, too.

>> still seeing a lot of reds. that teal is slipping into it. teal and turquoise. green still kind of there still. yellows, yellow influence, neutrals are still there. but the teals and the reds and oranges. oranges are just really popular right now, too. >> i started off with. >> mike: steve devoe is chairman and c.e.o. of the 66-year-old company. he does not paint a pretty picture of what they and every other paint manufacturer has been through over the last couple years. what he does do is point out why kelly moore fared better than most. first, history. they have it. started in 1946 by bill kelly and william e. moore, the goal was simple: make a quality paint that professionals would be proud to use. and second, understand that those professionals are not only your customers but your partners. what a concept! quality and loyalty trump chasing the market down. >> what we stay focused on was number one what we're known for, which is quality. we know who our customers are and we never took our eyes off

that. we became a real strong partner with them over the couple years that the downturn hurt us all. >> reporter: kelly moore even set up classes, tutorials for small business owners, customers, to teach them how to survive tough times and it looked for bigger markets. a western regional player in the u.s., kelly moore now ships paint to china, japan, cambodia, vietnam. the driver? >> quality product for one and the second factor is that it's made if the u.s. that's what they seek. that's what they want. it's that quality. >> mike: what kelly moore seeks is the next great break through in paint. odorless, longer lasting, environmentally friendly. strides have been made in almost every area-- except one. >> it can't apply itself. that's something people always want it to do. >> mike: (laughs) >> it's-- a lot of it lately is about ease of application and saving time and time is money. >> mike: the color of money. always a good choice.

>> mike: farming is a very difficult business and while technology and large corporate farms have made american agriculture some of the most productive in the world, small family farms are having a very difficult time surviving. unless they become very creative. how much passion, persistence, and profitability can you squeeze into a 15-pound block of cheese? at the petaluma creamery in petaluma, california, not quite enough of the last. why did you buy it? >> i wanted to saving a which you are in sonoma county. >> mike: that's a tall order. anybody ever told you you were nuts? >> oh, yes. many a times. >> mike: larry peter bought the 99-year-old petaluma creamery in 2004. it was idle, about to be torn down. a dairyman, peter owns 300 head of jersey milking cows, they roam free on his ranch in two rock, organic to nth degree.

a first-generation farmer, peter cobbled together a living from the land, milk, a pumpkin patch in the fall, farmer's markets. but after nearly two decades, he needed to do something to increase revenue. >> i figured if i could cut out the middleman, grow the feed, milk the cow, make the cheese and sell the product to the customer i would be able to help pay my mortgage better. >> mike: so he bought the creamery, bringing in milk for more than 30 dairies in northern california, saving them the transportation cost to creameries three and four hours away and giving him the milk necessary to make 300,000 pounds of high-quality specialty cheese a week. 22 varieties under his spring hill jersey cheese brand name. >> it was milk and it turns into curds and whey. >> mike: larry peter is a small curd in a $27 billion plus market. until -- >> chipotle seen that i was like an american dream. >> mike: he was discovered by the chipotle mexican grill

restaurant chain. its marketing slogan is "food with integrity." larry peter has both and his cheese is in their restaurants. >> they're looking for people with passion. they want to go back and they want to buy a product the way it was 45, 50 years ago where cows are just on grass, they weren't pushed. >> mike: it's the slow food, sustainable farming, buy local organic quality food movement that has pushed artesian cheese into cheese sold. and larry peter has found the sweet spot. >> now the artists of the world, the chefs, are taking these cheeses and developing them in their recipes and it's a real plus. >> people look for acid in cheese. people look for the bite of the cheese. people try to take cheese and judge it like they judge wine. for an example, the dryer the cheese, the dryer the wine. >> mike: the petaluma creamery, its cows roam free and its owner has a vision. >> if you love what you do and you believe in yourself and put

passion in anything you can do, you can make anything happen. >> mike: when you talk about creating jobs, the role of immigration can be a real hot button issue and nowhere do the two come in more direct contact with each other than in the central valley of california. now, you're about to see how taylor farms is using technology to help bridge that gap. it is the sound of technology making up for policy. it is where a machine fills the void left by a declining work force. a romaine field outside salinas, california, high pressure water jets cutting heads of lettuce, an efficient eliminator of stoop labor, better for the workers that remain and better for the company that has seen its labor pool drained by foggy

immigration rules. >> the purpose of the machine is to reduce our dependency on foreign labor. and numbers in the field in general. all of our fields prior to harvest are microtested where they're coming in and there's random samples taken throughout the field. and before we can bring our equipment in and harvest, those samples have been sent to a lab and the field has been deemed clear. >> mike: this one of two automated harvesters built and designed by taylor farms, a $1.6 billion a year player in the produce business. contracting with hundreds of farmers throughout california and arizona. taylor farms, a 17-year-old company, has a 65% share of the food service market, providing lettuce to some very well-known names. >> subway, mcdonald's, burger king, taco bell and if you go to a local restaurant it would be red lobsters, olive gardens, outback steak house. this is our loading dock. we have 23 dock doors, we start loading trucks around 7:00 in

the morning and load all night. >> mike: 13.5 million pounds of finished product, from romaine to iceberg and carrots and cabbage flow through the plant in salinas. taylor farms has a 20% share of the retail produce sector. >> we're all about getting it in and out as quick as possible because it is perishable. so we will turn this entire warehouse in one day. >> mike: so everything i see here is gone in one day and the place is filled again? >> filled again, yup. >> mike: while staggering to think about, nothing compares to this: the entire plant, everything except the walls, is moved to yuma, arizona, in november and then back to salinas in the spring. the whole plant follows the growing season. >> if it's moving, it's going to yuma. >> mike: watch! the 1,000 or so plant workers migrate as well with about a 95% retention rate. the same not true for field

workers. thus the automated harvesters, making sure the lettuce is picked when and how it needs to be. >> we're looking for a nice upright tight hearted starting to close in head. >> mike: they are the lifeblood of the u.s. economy: small and medium-size businesses. and the fastest-growing segment are those small businesses owned and operated by women. let's meet some women now who are tipping their hat, both to history and to future growth. it has been going on at paul's hat works in san francisco's richmond district since 1918, the making of hats. lineage that runs from its peruvian founder over 94 years to four young women from the neighborhood.

>> we were kind of an odd bunch before, didn't plan to be hatters, as most people probably don't, and stumbled on it, really did. stumbled on it. and the story and the ambience and that's what took us. >> mike: the story is a familiar one: in 2009, battered by the down economy, the owner needed to sell, no one would buy. so the option was to shut it down, walk away, hat in hand. except in walked a preschool preschool teacher, two costumers and a bookkeeper, saviors in bright colors, with passion. >> we did it because, a, this place was going to evaporate if we didn't. nobody else was going to do it. the four of us are makers of things. we love the craft and we love old crafts and this was something that you can only learn how to be a hatter by apprenticing. so this is a skill that they're not teaching in school. see, this is kind of a taller crown.

>> mike: what they will teach in school is how to run a business. classes they found and took to learn about price points, niche markets, branding, sourcing, business plans. >> business is a different language, you know? so i had to learn the language. >> mike: the language they're speaking now is of success and expansion. one of only a handful of hat makers anywhere working in the hand made custom fit on average $650 per hat market, they get their straw blends from ecuador, the resurgence in men's hats were which were practical and iconic in the 1930s, '40s, and '50s,s hats are on the heads of presidents and a younger generation. so paul's hat works is headed to the big apple. >> more people; more money; more style in new york. >> mike: the language of the custom hat business.

>> mike: most silicon valley startups have one common goal: to be the next breakout company. next, three brothers who are on that path. millions already know their product and their growth is nothing to c/tom at. >> so this is the pitch. >> mike: meet the brothers smith, nate, ben, and tom. and if the smith brothers has a certain ring to it, well, it's because they are related to those other ones of ahem cough drop and elixir fame. but what these smith brothers are known for are video games. cordy, cordy sky and sleepy jack, three of the most popular game apps in the digital universe. millions, multimillions of downloads across all platforms. >> mobile phones, tablets, p.c., television, set top boxes and trying to have kind of fluid

experiences across all those different types of streams. >> mike: the ability to go from here to there -- >> yup. >> mike: to there -- >> to the t.v. >> mike: is a huge deal. >> yes. yeah. and that's the thing i think we're ahead of the curve there in terms of our designs working that way. >> mike: they are the principals in eight-year-old silvertree media. a couple dozen folks in a downtown historic palo alto, california, building. they are virtual world creators and storytellers. when you consider there are hundreds of millions of devices upon which their games will play, there is nothing sleepy about that, jack. >> we always try to think of ourselves as the pixar of the mobile industry. so we try to make things that kids will like it but their parents will like it as well. if we go at these characters with-- that there is a life and a heart to each of the characters that we're working on that we show to the world that people will pick up on that over time. >> mike: this is how they got their start, creating a fairy

world for disney, which led to "tron" and work for electronic arts and microsoft. in 2009 they decided to launch their own stuff but how did they get there? where does one start on this journey into virtual fame and fortune? try pittsburgh. >> half of them are computer scientists or engineers and the other half are artists. >> mike: both ben and tom are graduates of carnegie mellon's unique entertainment technology center master's program, a combination of computer sciences, engineering and art that has given birth to perhaps more game makers and changers than any other place in the real world and was the home of -- >> find the best in everybody. >> mike: professor randy palm whose last lecture became a phenomenon. it was a viral inspiration to millions but he was an inspiration to the smiths long before that. >> from the beginning of us starting this company he said "you guys really have something here. you have something unique.

and keep developing that. keep making a-- make the best company you can possibly make and shoot for the stars." >> mike: shooting for the stars. they can do that. >> it will take you a long time to design a square head on this guy. >> yeah. >> mike: it's no secret that the new media-- both the internet and digital devices-- has taken a large bite out of the newspaper and magazine businesses. but there are some notable exceptions. we'll take you now to one company that is determined not to let the sun set on old media. it is doing more than just scratching for chicken feed in the media barnyard. it is planting the seeds of new business and adding to the stew of profitability. it is sunset magazine.

>> print's not going to go away. that our readers love having that thing they hold in their hands. and the important thing is for us to understand why they are taking a print publication. i probably need to talk to kathy right away. >> mike: they have been putting together sunset magazine since 1898, started as a means of drawing tourists west by the southern pacific railroad. it's the largest life-style publication this side of the rockies. >> we have 1.25 million subscribers and our total audience is about 4.7 million. >> mike: based in menlo park, its seven-acre campus is home to a test kitchen. every recipe vetted here. >> sunset has the best testing system i've ever seen. >> mike: and working gardens. it if grows in the west-- or doesn't-- they know about it first. you're carrying the bible. >> i am carrying the bible. >> mike: this is -- >> and it's heavy! >> mike: this is the bible. sunset's garden book having sold over six million copies, the latest version the best selling book of its kind this year.

both food and gardening are bedrock under the sun se$ foundation but magazine bedrock has been crumbling so how has the sunset brand-- a division of time warner-- managed to say strong, relevant, desirable? by throwing a party. this one of several events that sunset puts on yearly. it's called "bringing the brand to life." 20,000 people over two days. and nobody likes it more than one very important group. >> we have celebrity chefs and we have gardening experts and we have home experts and our editors are talking, there's a lot of sampling. it's a really fun event and that actually is of great interest to our advertisers right now to be able to bring the brand to life and to be able to introduce consumers directly to the brand. >> audiences today expect that it's a dialogue, not a one-way street. and that's actually challenge for print. you can not simply be the authority. >> mike: along with events, sunset engages in a multipronged business strategy.

a million unique viewers on its web page. an ipad application, licensing, custom publishing, sunset does book for pillsbury and weber grills and is now branding and selling its own line of plants. >> sunset editors selected these from a lot of new offerings working with the plant development company. >> mike: sunset magazine: sewing the seeds of new business in the shifting soil of modern media. do you suppose that's chicken stew? >> mike: the restaurant business is one of the toughest the world. more close than open every year and of those that stay open, very short expected life span. just about two years. so how do you explain one northern california family owned and operated restaurant business that keeps expanding? in this case, the secret really is in the sauce.

it is that all-american recipe for success: hard work, quality product, loyal customers and one special secret ingredient. >> it's the sauce. it really is. >> my grandmother told me never, ever, ever give the recipe out or you're kicked out the family. >> mike: (laughs) if the sauce is the key, what it has opened the is the door to success for everett and jones, arguably the best known barbecue restaurant chain in northern california. five outlets with this, the jack london square location in oakland, the largest. >> those are homemade sausages. >> mike: it's owned and operated by dorothy king jurnigan and her children, four daughters and two sons. business acumen passed generation to generation. >> consistency. that's the key to having a successful business. >> knowing the history and where my grandmother went through to hit this business it just made me work harder and just love it. i love it.

>> mike: it's a history that stretches back to a shoeless family in rural alabama, one that moved to oakland in the '50s and one that saw dorothy everett, a single mother of eight, open her first restaurant-- with that sauce-- in 1973. it provided a good living and created a desire for something more. >> my mom said to me "dorothy, they are not going to give a black woman that much money. >> mike: but they did and after a stint at the haas business school at u.c. berkeley, she opened this location, one that includes a music venue and has played host to a string of sports and entertainment celebrities. contacts and connections that are leading everett and jones to a southern california expansion. >> i'm also expanding, too. i have a store coming up in los angeles. so future's great. >> mike: along with bricks and

mortar and researching opportunities for their ribs in retail, the everett and jones name is spreading across the u.s., the sauce available in 300 stores. and thanks to the internet, internationally orders coming in from fresno to france, from roanoke to russia. it seems once they taste it, well-- >> my mom always said word of mouth is the best advertisement. >> particularly when the words taste so good. >> mike: there is no business that is recession proof but there is one that comes close: pets, and all the stuff people buy for them. americans spent over $50 billion on their pets in 2011, the largest chunk of that on food. there are more of them than kids and we spend more on them than

on our husbands and wives. pets. and if the slow-food movement is all the rage for humans than sparky, bucky, cuddles, and toots aren't far behind. >> it is totally inspired with what we were doing with our own food. things that we were buying inspired we should be applying these same ideas to the pet food, the fact that we only eat local and our pet food should be local as well. we thought pet owners would like that idea. >> mike: they did, in large numbers. so large, five-year-old san francisco-based small batch pets is one of the fastest growing companies in the raw slice of the $20 billion pet food industry. >> dogs and cats don't cook. that's the best way i can put it. they're anatomically made to eat raw food. it's completely bio available to them, they assimilate it properly, you'd see it in their coat, their teeth. >> mike: nice doggie. >> this is where all the magic began.

>> mike: small batch pets started in the mission district, one bowl, one blender, giving the food away to folks in the neighborhood. that was then. this is honestly small batch. >> we get in a truckload on a wednesday morning and we're shipping almost half of it out that same day. >> mike: this is now. distribution border to border in california with expansion on track for the entire pacific northwest. that said, how do you keep the small in small batch? >> we're going to grow. that's going to happen. with a great product get it out there but we're still producing it in relative small batches to the rest of the industry. >> as long as we are stringent in our belief and we adapt the same business model in other regions, source locally, for example, we're going to go to the pacific northwest, set up manufacturing in portland, we're going to produce there and procure ingredients there is. we're only going to ship to that region. >> mike: buy local; make local; eat mantra. a slow food mantra for the

animal kingdom. >> quality ingredients made locally. what more do you need? >> mike: ask him. i've often asked why i spend so much of my time crisscrossing america reporting on and talking to small business owners. well, the answer is really pretty simple: look, the u.s. economy has become centered on high finance, meaning major banks, corporations and wall street. that's fine. except that it's the blood, sweat and tears of small business people that have made this country what it is today. it's a that same blood, sweat and tears that will get us where we want to go. these are our stories, this is who we are. i mike hegedus. thanks for joining us for this "n.b.r." special edition, made in america. see you online at nbr.com and right back here tomorrow night. captioning sponsored by wpbt

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